Investors look for risk 'until risk bites them': Strategist

G Squared Private Wealth Chief Investment Officer Victoria Greene joins Yahoo Finance Live to discuss the latest market action.

Video Transcript

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AKIKO FUJITA: Welcome back to "Yahoo Finance Live." We are seeing the Dow now up about 220 points. The NASDAQ and the S&P 500 hitting new intraday highs today as inflation fears continue to sort of be pushed to the back, at least for now. We're also seeing oil paring back some of the gains from yesterday, but it is still hovering near three-year highs.

Let's bring in Victoria Greene, G Squared Private Wealth chief investment officer. Victoria, good to talk to you today. We're talking about new records yet again in the session. How are you looking at this in the context of your portfolio and whether you should maybe start to think about rebalancing?

VICTORIA GREENE: Absolutely One of the things I think is funny is everybody loves risk until risk bites them. So we want to say, OK, this is a great time, as you hit new highs. We've been kind of range-bound. We've hit these highs and then haven't really pushed that much higher and came back down multiple times now. So I think this is a great time, before you go on vacation, before everybody leaves town, look at your portfolio. You may be shocked how things have shifted, especially the growth versus value, tech stocks, the QQQ. That's had quite a run.

You look starting back in 2020, the NASDAQ's up about 60%. S&P is up about 30%. Dow is up about 20%. And Barclay's aggregate's up about 5%. So if you started a 50-50 portfolio in January of last year and you haven't done anything, you may be having more risk than you anticipate now.

The other thing you can look at is, if you're taking current income or you have some of these investments in a tax-deferred account, that's a great time to say, hey, if I'm going to take part of my RMD now, I need some monthly income. Take them from equities. Look to balance your risk a little bit.

Everybody knows summer gets a little bit more volatile. And we'll have to hopefully finish the year out strong. But there's kind of this expectation, definitely, that volatility is about to ramp up over the summer.

ZACK GUZMAN: Yeah, Victoria, I mean, I'd be curious to get your take on how people should be rebalancing. We've had a few guests maybe disagreeing with each other here when it comes to growth in cyclicals. Last time you were on, I believe, if I'm not misremembering here, you were talking Chevron and some of the bets you liked in energy. I mean, how do you look at that sector? Of course, it's outperformed here year to date. But how do you look at it relative to maybe some of the risks around rates and how investors maybe should be balancing back towards that sector now?

VICTORIA GREENE: Sure, absolutely. Cyclicals tend to do very well during inflation. And energy is actually the highest correlated sector with inflation. So if we think we're hitting a period of higher inflation, then it's great to have some exposure to that. And if you also look at where some of these stocks were trading pre-pandemic, energy is of those sections that, certainly year-to-date--

WTI is up about 44%. Chevron's up about 25%, Exxon a little bit more. You've seen a huge rise in these energy names. But relative to where they were trading in 2019, early 2020, they're still relatively valued. We think there's a great chance for continued revenue growth in the energy market as well.

For instance, Chevron has about a 400 million sensitivity per $1 change in Brent. So if we think oil prices continue to push higher, which it does look like it's likely they could-- supply right now is very constrained. Now OPEC plus is playing very, very nice with us. And they could obviously change that if Iran ever comes online or Venezuela. But we kind of see those as lesser likely events.

If OPEC plus continues to play nice, which they are signaling they are-- they've been very, very soft-handed with how they're dealing with this. I think you're going to see continued supply constraint. And you could see oil push into the hundreds, which quite frankly, I think makes a good thesis for why you should hold some of your energy stocks, Chevron, Conoco, some of the EMPs. You've got your Diamondback and Devon.

Some of those names, yes, they've had a great run here. But considering what the future looks to hold for us, we think it's a good time to hold those a little longer.

AKIKO FUJITA: Victoria, you've put out a stern warning against speculation in your notes, saying, don't chase the hot themes here. What specific names are you talking about? What do you think investors should be cautious on? What should they stay away from?

VICTORIA GREENE: Right. Well, at risk of incurring the Reddit wrath, I might mention all of the meme stocks out there. I know it's exciting. And we've had these people basically become instant millionaires through speculation. And we see some people, not to sound like a millennial I am, but with FOMO, right? You see your neighbor next door suddenly go, and they can show you their portfolio. And it's got two commas in it. And you start getting a little bit of green envy.

I have no problem with speculation. I think you just need to kind of narrow it off in your portfolio. And don't go in too far. Consider it to whatever you would take to Vegas is what I'd put in those stocks. So obviously, AMC, I was reading today, right now, if the Russell 1,000 rebalanced, AMC would be in the Russell 1,000 now. Its market cap valuation has been pushed up.

And so you have a lot of those speculative names that I think you just want to make sure you're aware you're going into it with less of a fundamental reason for investing in it and more of a pure momentum play, which is not necessarily the best way to invest for a core investment.

AKIKO FUJITA: Whatever you take to Vegas, I think that's a new one, Victoria, in talking about somebody's portfolio. Always good to talk to you, Victoria Greene, G Squared Private Wealth chief investment officer.

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